Corporate results: United Bank posts slightly higher profit in 2013
Bank announces total cash dividend of Rs10 per share .
The bank’s board of directors also announced a final cash dividend of Rs4 per share, taking the total dividend for 2013 to Rs10 per share. PHOTO: FIE
KARACHI:
After-tax profit of United Bank increased 4% to Rs18.6 billion in 2013, according to financial results announced on Wednesday.
In the fourth quarter of 2013, the bank’s profit grew 22% quarter-on-quarter to Rs5.6 billion.
The bank’s board of directors also announced a final cash dividend of Rs4 per share, taking the total dividend for 2013 to Rs10 per share.
According to Topline Securities, low interest rates and a higher cost of deposits resulted in a 1.6% decline in net interest income to Rs37.9 billion whereas lower bad loan provisions of Rs1.1 billion (Rs3.3 billion in 2012) gave primary boost to the bank’s earnings.
“We attribute the decline in net interest income to the low banking spread scenario, which averaged 6.24% in 2013 as opposed to 7.02% in 2012,” it said.
The minimum discount rate, which was previously fixed at 6%, is now linked with the SBP repo rate, causing an increase in the cost of savings deposits across the sector. But, according to Global Securities, UBL minimised the impact of the high cost of savings deposits by improving its deposit mix in 2013.
“UBL has shown improvement in its loan book during 2013 (with) the gross non-performing loans ratio improving to 12.61% in September 2013 against 14.02% in December 2012. Resultantly, provisioning expense booked during the year declined to Rs1.3 billion in 2013 from Rs4.1 billion in the previous year,” it said, adding that non-markup income of the bank also grew 6% year-on-year in 2013, indicating strong revenues from fee and commission income.
“UBL is likely to attract growth in this head going forward due to improving revenues from UBL Omni and commission from home remittances,” it said.
As for the sharp earnings growth on a quarterly basis, Global Securities cited the increase in net interest income by 11% on a quarter-on-quarter basis due to a likely margin improvement. Besides, it also noted the reversal of provisioning expense by Rs166 million as a reason for growth in last quarter’s earnings.
Published in The Express Tribune, February 20th, 2014.
After-tax profit of United Bank increased 4% to Rs18.6 billion in 2013, according to financial results announced on Wednesday.
In the fourth quarter of 2013, the bank’s profit grew 22% quarter-on-quarter to Rs5.6 billion.
The bank’s board of directors also announced a final cash dividend of Rs4 per share, taking the total dividend for 2013 to Rs10 per share.
According to Topline Securities, low interest rates and a higher cost of deposits resulted in a 1.6% decline in net interest income to Rs37.9 billion whereas lower bad loan provisions of Rs1.1 billion (Rs3.3 billion in 2012) gave primary boost to the bank’s earnings.
“We attribute the decline in net interest income to the low banking spread scenario, which averaged 6.24% in 2013 as opposed to 7.02% in 2012,” it said.
The minimum discount rate, which was previously fixed at 6%, is now linked with the SBP repo rate, causing an increase in the cost of savings deposits across the sector. But, according to Global Securities, UBL minimised the impact of the high cost of savings deposits by improving its deposit mix in 2013.
“UBL has shown improvement in its loan book during 2013 (with) the gross non-performing loans ratio improving to 12.61% in September 2013 against 14.02% in December 2012. Resultantly, provisioning expense booked during the year declined to Rs1.3 billion in 2013 from Rs4.1 billion in the previous year,” it said, adding that non-markup income of the bank also grew 6% year-on-year in 2013, indicating strong revenues from fee and commission income.
“UBL is likely to attract growth in this head going forward due to improving revenues from UBL Omni and commission from home remittances,” it said.
As for the sharp earnings growth on a quarterly basis, Global Securities cited the increase in net interest income by 11% on a quarter-on-quarter basis due to a likely margin improvement. Besides, it also noted the reversal of provisioning expense by Rs166 million as a reason for growth in last quarter’s earnings.
Published in The Express Tribune, February 20th, 2014.